Bombshell landed on markets today, a real man-bites-dog story. The Securities and Exchange Commission, after so long turning a blind eye, today brought a civil suit against Goldman Sachs charging fraud. SEC suit alleges Goldman Sachs colluded with hedge fund Paulson & Co. to sell to the hedge fund CDOs to sell for their customers after the hedge fund took a short position against the same CDOs. Or, in the SEC's snappy phrasing, "Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio while telling other investors that the securities were selected byan independent, objective third party."

Looking a a potential billion dollar loss, Goldman stock fell 20%. That plunge sucked down other bank stocks, which in turn generously sucked down the dow 125.91 (1.13%) to a cosmetically attractive 11,018.66, and the S&P500 down 19.52 (1.61%) to 1,192.13.

The logic of the falling stocks is plain. First, banking sector was slammed, 2nd, uncertainty and apprehension about a new round of bank crises scares stock investors, and 3rd, and probably most influential, stocks were already trembling on tippy-toes to reach higher and so were especially vulnerable to any body block from any direction.

Ask me not, however, the logic of gold dropping as well . . . Unless hedge funds pressed for cash or margin calls liquidated positions, or from fear dumped gold, or the Nice Government Men slammed gold to preempt any flight out of stocks and the dollar into gold. Most likely it was one scared market spooking another, but the world of contradictions, anomalies, and paradoxes is the one we live in, thanks to the Almighty yankee government & the Federal Reserve.

The US DOLLAR INDEX rose 35 basis points to 80.832, its highest price in five days but still in a downtrend, and slightly lower than last Friday's close. The dollar index could rise to 81 but must beat 82 to break out of the present downtrend. Not much evidence here of a panic into the dollar. In fact, nothing has changed since today's rise did not boost the dollar index back into the uptrend channel.

Both SILVER and GOLD PRICES held at the bottom of the range we have been watching, 17.20 and $1,135. Gold's low came at $1,130.50, silver's at 17.58. The gold price closed down on Comex $23.40 at $1,136.30 while silver lost a whopping 75.5 cents to close at 17.76.

All right, what now? Two outcomes are possible: metals can all or rise from here. Take the first first. Silver might revisit 16.50 and gold $1,085. Tis possible, but maybe today was a one day occurrence. Remember that even counting today's drops silver and gold prices remain above their uptrend lines. The trend has not been violated, so until that happens they are still in an uptrend.

So maybe today's events were not a disaster after all, just the final leg of a correction. If so, then silver and gold prices will continue rising and more strongly because the weak holders have been shaken out.

Me, I have to buy at these support levels. Risky? Yes, but so is life, unless you want to spend it locked in a dungeon in solitary confinement where nothing can get you.

To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down. Whenever I write "Stay out of stocks" readers inevitably ask, "Do you mean precious metals mining stocks, too?" No, I don't.